Media reports about bribery scandal at Statoil, Norwegian State oil company

Statoil CEO resigns amid bribery scandal

23-Sep-2003 from Agence France-Presse (via ClariNet)

OSLO, Sept 23 (AFP) - The chief executive of Norwegian state-run oil group Statoil, Olav Fjell, resigned Tuesday after the company became embroiled in a scandal over possible bribery in its dealings with Iran.

In a statement Statoil said Fjell, following an emergency board meeting, decided to leave the company “in order to normalise the group’s position, both in-house and externally.”

Fjell’s resignation came as no surprise to financial analysts and just days after Statoil chairman Leif Terje Loeddesoel had stood down in response to the launch of a police probe into bribery allegations surrounding the company’s contract with an Iranian consultancy, Horton Investments.

Norwegian police raided Statoil’s headquarters on September 11 following media reports alleging that the company had last year signed an 11-year contract with an Iranian consultant, Abbas Yazdi, for 15.2 million dollars to smooth business development deals in Iran.

The terms of that contract, which was to ensure Statoil consultancy services on business and political developments in Iran until 2012, may have violated Norwegian law.

According to Norwegian financial daily Dagens Naeringsliv, Yazdi has close ties to a senior executive at Iranian national oil group NIOC.

The paper alleged that the NIOC executive, Mehdi Hashemi Rafsanjani -- the son of the former Iranian president -- would likely pocket the 15.2 million dollars.

Statoil is heavily involved in oil activities in Iran, where last year it won a contract to develop South Pars, one of the world’s largest natural gas fields. NIOC is Statoil’s partner in the contract.

Fjell denied on Tuesday any involvement in securing the consultancy contract, though he did admit to authorizing one of his employees to go ahead with the deal.

Speaking after agreeing to resign, Fjell told a news conference: “I admit handling the situation badly when I was informed of the contract. But ... I did not take any part in forming the agreement with (Iranian consultancy) Horton.”

The contract has since been terminated, though Statoil has said previously that Yazdi’s company would retain 5.2 million dollars already transferred to a Swiss bank account upon signing of the contract.

Statoil’s acting board spokeswoman Kaci Kullman Five said Statoil had hired accountancy firm Ernst and Young “to evaluate all of its international consultancy contracts” as part of a process of reestablishing its reputation as an ethical company.

“Statoil’s international ambitions will be retained with high ethical standards,” Kullman Five said.

“It is fully possible for the group to succeed internationally without becoming involved in activities which lie in a borderland as regards ethical norms and rules,” she said.

Inge Hansen, the company’s chief financial officer who has been appointed by the board to serve as acting chief executive, said Tuesday the bribery scandal was the result of a series of mistakes and did not represent any failures on Statoil’s behalf, noting that the group’s internal revision department had alerted management to the contract.

“It is the handling of the matter that was wrong,” he said on Dagens Naeringliv’s website.

Fjell, who was given a vote of confidence by the board last week, said the decision to resign was taken jointly by himself and his fellow directors during an eight-hour board meeting overnight.

A Statoil statement said: “It is important that a calmer atmosphere be established as quickly as possible in relation to the group, so that Statoil’s development can continue.”

The group had previously confirmed the resignation of the head of Statoil’s international exploration and production division, Richard Hubbard, whom Dagens Naeringsliv said was suspected of misinforming Statoil’s management of the terms of the consultancy contract.

Fjell departs with two years’ salary and entitlement to an early pension from the age of 60.

Embattled Statoil chief steps down

BBC NEWS Sept. 23 2003

The chief executive of Norway’s Statoil has resigned over a police probe into possible corruption in the state-owned oil firm’s dealings with Iran.

The resignation of Olav Fjell came after a marathon overnight board meeting lasting into Tuesday, and follows the departure of chairman Leif Terje Loeddesoel at the weekend.

Just a week earlier, the Statoil board had expressed its confidence in Mr Fjell, who has come under fire for a $16m package of incentives paid to consultants linked to Iran.

“This is a sad day,” said Statoil chief financial officer Inge Hansen, who takes over as interim boss.

“I am going to work hard, and work to get the employees with me.”

In a statement, the company said it was “important that a calmer atmosphere be established as quickly as possible in relation to the group, so that Statoil’s development can continue.”

Statoil would not say what new information led to Mr Fjell’s decision to step down, so soon after being supported by the board.

The apparent change of heart has led to reports of a split in the board, with some members unsatisfied at the level of disclosure Mr Fjell made at the earlier meeting.

Ups and downs

Statoil, which was founded in 1972 and partly privatised in 2001, has a history of management turbulence.

The government sacked the board in 1999, and the chief executive resigned soon after in a dispute about cost overruns.

His predecessor had also been ousted for failing to control costs.

Statoil’s purpose is to explore internationally for oil and gas, as a hedge against domestic supplies running out in Norway, currently the world’s third-biggest petroleum exporter.

The company is under considerable pressure to meet high ethical standards in all its international operations.

Statoil: Regulator to Look Into Iran Deal

http://finance.lycos.com/qc/news/story.aspx?story=3583251326 September 2003

OSLO, Norway (AP) -- U.S. regulators plan an informal inquiry into Statoil ASA’s controversial consultancy contract to expand business opportunities in Iran, the Norwegian oil and gas company said Friday.

Statoil, whose shares are listed on the New York Stock Exchange as well as the Oslo Stock Exchange, said the U.S. Securities and Exchange Commission requested certain documents and that it will cooperate with the SEC inquiry.

Earlier this week, Statoil chief executive Olav Fjell resigned amid a widening investigation of claims the company made improper payments in its effort to expand into Iran.

Fjell, 52, was the third Statoil executive to leave since Sept. 12. He was replaced by chief financial officer Inge Ketil Hansen, a 57-year-old business economist with broad management experience, as acting CEO.

Chairman Leif Terje Loeddesoel resigned earlier, citing the controversy over whether the company acted improperly by hiring Iranian-operated Horton Investment Ltd. under contract for $15 million to help it develop business deals in Iran.

Fjell terminated the contract with Horton last week and Statoil’s head of international exploration and productions, Richard J. Hubbard, resigned at that time.

Earlier this month, Norway’s economic crime unit Oekokrim raided the state-controlled company’s headquarters in Stavanger, seeking evidence to determine whether the contract involved corruption. Oekokrim hasn’t said if it found any improprieties.

Statoil, which was founded by the government in 1972, is seeking to expand internationally. Norway produces about 3 million barrels of oil, plus natural gas, making it the world’s third largest oil exporter after Saudi Arabia and Russia.

Statoil was partly privatized in 2001 when the state sold 17.5 percent of its shares to investors.

U.S. Shares of Statoil were down 26 cents to close at $8.94 on the New York Stock Exchange.

Norway’s Statoil gets new boss amid corruption scandal

Norway’s state-run oil group Statoil Saturday announced the appointment of a leading banking executive, Jannik Lindbaek, as its new chairman after his predecessor stood down amid allegations of corruption in Iran.

Leif Terje Loeddesoel resigned in September in response to the launch of a police probe here into bribery allegations surrounding the company’s contract with an Iranian consultancy, Horton Investments.

A company statement said Saturday Kaci Kullman Five, Statoil’s former spokesman who has been serving as acting chairman, will take over as deputy to Lindbaek. The company’s strategy remained unchanged, the statement stressed.

“Statoil is facing major challenges to its activities in Norway and abroad,” the statement noted: “The supervisory council stresses the need to restore calm and confidence in the company.”

It described Lindbaek as an executive “of great experience in company management and work abroad, and in his knowledge of the oil and gas industry.”

The 64-year-old is the deputy chairman of the Norwegian Den norske Bank (DnB), and also heads the Norwegian branch of the anti-corruption agency Transparency International.

NTB news agency quoted Norway’s Oil and Energy Minister Einar Steensnaes as saying: “This is an intelligent and fair choice, which I believe to be a choice for Statoil’s future.” Norway controls 82 percent of the company’s capital.

Norwegian police raided Statoil’s headquarters on September 11 following media reports alleging the company had last year signed an 11-year contract with an Iranian consultant, Abbas Yazdi, for 15.2 million dollars to smooth business development deals in Iran.

The terms of that contract, which was to ensure Statoil consultancy services on business and political developments in Iran until 2012, may have violated Norwegian law.

According to Norwegian financial daily Dagens Naeringsliv, Yazdi has close ties to a senior executive at Iranian national oil group NIOC.

The paper alleged that the NIOC executive, Mehdi Hashemi Rafsanjani -- the son of the former Iranian president -- would likely pocket the 15.2 million dollars.

Statoil is heavily involved in oil activities in Iran, where last year it won a contract to develop South Pars, one of the world’s largest natural gas fields. NIOC is Statoil’s partner in the contract.

Statoil’s chief executive Olav Fjell also resigned after the company became embroiled in scandal.

Inge Hansen, the company’s chief financial officer who was the acting chief executive, has said the bribery scandal was the result of a series of mistakes and did not represent any failures by Statoil.

Fjell has denied any involvement in securing the consultancy contract, though he did admit to authorizing one of his employees to go ahead with the deal.

The contract has since been terminated, though Statoil has said previously that Yazdi’s company would retain 5.2 million dollars already transferred to a Swiss bank account upon signing of the contract.